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A Study On Earnings Management Of Equity Financing In Chinese List Companies

Posted on:2004-06-15Degree:DoctorType:Dissertation
Country:ChinaCandidate:X J HuangFull Text:PDF
GTID:1116360122970388Subject:Technical Economics and Management
Abstract/Summary:PDF Full Text Request
Chinese securities market has accomplished great achievement since instauration before more 10 years. Chinese securities market whose total market value has developed $600 billion has become the third Asia-Pacific securities market after America and Japan. The development of Chinese securities market creates the condition for adjustment of Chinese economic structure and strategic adjustment of state-owned economy, creates the base of efficacious corporation-govern structure, and operates great function for improving distributive efficiency of social resource, innovation of modern financial system and constitution of socialistic market economy system. But there are many deficiency in the process, especially, accounting information distortion, information inadequate disclosure and ramping of secondary market. A great lot of studies and data show that many firms manipulate the earning by all sorts of means in order to obtain qualification of financing. Earnings management is not only phenomenon in China, it comes of and prevails over developed countries. Prevenient president of America Securities and Exchange Commission (SEC), Arthur Levitt pointed out that earnings management has become hackneyed and non-defiant habits in America Securities market and has evolved the game of among market participants and violation market principle.The academic foundation stone of earnings management is composed of efficient markets hypothesis (EMH), capital asset pricing model (CAPM) and agency theory. The bonus plan hypothesis, debt contract hypothesis and political cost hypothesis are base of investigation earnings management. The investigators of earnings management must firstly compute firms/ earnings when they are not earnings management. They must estimate when firm management has motivation of earnings management and then compute actual earnings of firms whose have not motivation of earnings management, lastly, compute the earnings management level of firms whose have motivation of earnings management.Based on dissimilar point of view of studying earnings management, there are three models that evaluate level or occurrence of earnings management, they are total accruals model (primary model), specific accruals model and accruals distribution model. Jones model, modified Jones model and KS model (Kang-Sivaramakrishnan model) are primary total accruals models.The paper discover that Jones model and modified Jones model have two shortcomings when they study earnings management of Chinese equity financing, first, expository power is slight, second, only about 30% regressive parameters have statistical significant, which is the reason that Jones model and modified Jones model do not involve in short-term expenses. But the listed companies can manage earnings by short-term expenses, and the paper discovers that there is not a correlation between short-term expenses and revenue in Chinese listed companies. Based on the shortcomings, the paper restructures a new total accruals model after analyzing the accounts of influence on accruals, the expository power and regressive parameters of having statistical significant heighten much and achieve level of international congeneric studies, which proves model restructures is successful.After descriptive statistics of financial position during initial public offerings (IPO), the paper detects the IPO firms are likely to earnings management before IPO. After positve study on the level of earnings management, the paper discovers IPO firms do significantly earnings management in IPO next year and before. The magnitude of earnings management is 7.8% of the beginning total assets in IPO year, and other years the paper don/t discovers significantly earnings management. The paper still discovers credit business is a tool of earnings management.The paper discovers rights issue firms do significantly up-earnings management in announcement rights issue next year and before, but after then don/t discover earnings management of rights issue firms.According to offering rights issue, right...
Keywords/Search Tags:Earnings Management, Discretionary Accruals, Accruals Model, Listed Companies, Cumulative Abnormal Rate of Return
PDF Full Text Request
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